California Gov. Gavin Newsom and Democrats in the state’s Legislature introduced a bill that would fine oil companies for making too much money. The governor has called a special session to consider the bill, which is vaguely worded and does not describe how much profit is too much profit.
If it passes, California would be the first state to fine oil companies for price gouging.
The proposal lacks specifics; Newsom’s office said those would be negotiated with lawmakers.
Gas prices in California are higher than in most places because of the government taxes and fees, as well as regulatory burdens. For every gallon of gas in California, drivers pay:
- 54 cents in state excise tax
- 18.4 cents in federal excise tax
- 23 cents for California’s cap-and-trade program to lower greenhouse gas emissions
- 18 cents for the state’s low-carbon fuel programs
- 2 cents for underground gas storage fees
- 3.7% in other state and local sales taxes
California gas also prices vary from county to county but today the price averages $4.62 statewide, compared with Alaska’s average of about $4.00, according to AAA.
California has a complicated relationship with oil and gas. For the past few summers the state faced rolling energy blackouts because it doesn’t have enough power to supply all consumers. This year, the legislature added funds to buy fossil fuels from the very gas power plants that will start shutting down next in 2023, as the state the state tries to become carbon neutral by 2045.
Last week, Gov. Newsom criticized five oil refiners for refusing to show up at a state hearing on gas price spikes.
The five major oil refiners — Chevron, Marathon, Phillips 66, PBF Energy and Valero — rejected invites to the hearing, Newsom’s office wrote.
“Every Californian deserves to know why we were being fleeced at the pump even as gas prices declined across the country and crude oil prices were going down. The oil industry had their chance today to explain why they made record profits at our expense but they chose to stonewall us. That’s because they have no explanation – big polluters are lining their pockets while they cause financial pain for millions of California families and threaten the very future of our planet. With the Legislature’s support and engagement, we’re going to hold these companies accountable with a price gouging penalty that will deliver relief to Californians,” Newsom said.
The governor’s office reported that in the third quarter of 2022, oil companies reported record high profits:
- Phillips 66 profits jumped to $5.4 billion, a 1243% increase over last year’s $402 million;
- BP posted $8.2 billion in profits, its second-highest on record, with $2.5 billion going towards share buybacks that benefit Wall Street investors;
- Marathon Petroleum profits rose to $4.48 billion, a 545% increase over last year’s $694 million;
- Valero’s $2.82 billion in profits that were 500% higher than the year before;
- PBF Energy’s $1.06 billion that was 1700% higher than the year before;
- Shell reported a $9.45 billion haul that sent $4 billion to shareholders for stock buybacks;
- Exxon reported their highest-ever $19.7 billion in profits;
- Chevron reported $11.2 billion in profits, their second-highest quarterly profit ever.
Newsom, who is rumored to be planning to run for president, has taken credit for lowering prices. “Governor Newsom has taken action to lower prices at the pump, ordering the switch to winter-blend gasoline and demanding accountability from oil companies and refiners that do business in California, leading to record relief at the pump for consumers. Since California’s record-high gas prices of $6.42, the Governor’s actions have reduced those prices to $4.99 most recently – a decrease of $1.43 since the peak,” his office said.
Prices at the pump have dropped in part because of the hundred of millions of barrels of oil being released from the Strategic Petroleum Reserve by the Biden Administration.
The SPR has been depleted since Biden took office from 640 million barrels to 387 million barrels.
Just go ahead and declare gas illegal in Ca. Toss your people into the dark ages overnight.
When the bill finally hits Ca for 35+ years of liberal insanity, it will be glorious. Painful, but glorious.
Oil company monopolies need to be broken up regularly to preserve the free market economic concept 😉
Which oil company monopolies are you talking about?
Whatever California does, we should do the opposite. They will come here instead where business isn’t so woke.
Comparing profits to a pandemic year and expecting them to stay flat during hyperinflation is asinine.
The oil company’s should just leave California. Then in 48 hours they could go back naming their price. Don’t sell to the government.
The oil industry is a very complicated affair. It’s Wall Street and Vegas tied together. What’s never mentioned are the huge losses suffered during the COVID lockdowns. Anyone go out of business? No, they saved money for a rainy day. Now Newsome wants to strip away that rainy day fund.
Your map of Alaska detailing fuel costs has a large GREY area, that says no data available, I can attest that the cost of one gallon of unleaded in that region is between 8 to 15 bucks per gallon.
My understanding is that Gavin Newsom is a personal plaything of the Getty family. Yes, the same family that derives their wealth from Oil baron J. Paul Getty. Go figure. Gavin, of the slicked-back-drug-dealer look, needs to explain if his plan would make MORE or LESS gasoline available. After that, he should explain how and if the plan would make gasoline MORE expensive to consumers or LESS expensive to consumers.
I didn’t go to Harvard or Yale but will suggest that making it less profitable and more difficult for oil companies and distributors to do business in California will REDUCE the supply of gasoline in California. The governor and the legislature may have another view. Let’s see what happens and what happens to the price.
More socialism. Hopefully, CA will impose more taxes on the Pelosi businesses too. Nancy is Gavin Newsom’s aunt.
And how many times haven’t Alaskans tried to raise taxes on their own oil industry in order to fund State government?
Whidbey,
The difference here, as you should know, is we own the oil. Selling for the highest possible price is just good business. Plus, the Alaska Constitution requires we obtain maximum benefit for the sale of our natural resources- i.e., the highest possible price.
If you don’t agree with any of this, how about I buy your house for say, ten cents on the dollar?
M if you like taxing the oil company’s more then I want to tax you more. We need our citizens to pay more and your first. You make to much money and the government needs it .
The liberal word of note the last few years has been gaslighting, liberals always broadcast their moves before they make them. Using gas and blaming the producers is the ultimate in gaslighting. There almost a dollar in baked in taxes just to CA government in each gallon and they want to add more, which will only further hurt the consumer. I think the 3.7% in other state and local taxes is low, most places there have a 10% sales tax to boot!
Man, with every passing news report it seems like I’m living in an Ayn Rand novel!
Horse and buggy days ahead. Governments are corporations. Mercantile interests are corporations. You would think they would be somewhat alike and in kind. But no. Who does CA represent? Not people in CA, not CA mercantile interests. Who is the constituent? WEF?
The liberal Newsom wants to run for President. And he thinks he can get the black vote by pushing for slavery reparations. Now he’ll try and garner the working class vote with this stunt.
In a perfect world the oil companies would all pull out of California. Let the liberals walk.
Big Oil just pulled-off one of the biggest heist in history. In three months, ExxonMobil made $20 billion. The gasoline price should be production costs, plus transportation costs, plus a reasonable profit and not profit of 400%. Big Oil drives inflation. To beat the Big Oil gasoline price rip-off, buy an electric car. Ukraine is on the other side of the world and has nothing to do with Alaskan oil.
Oil company’s monopolize and raise prices going against the free market; and as Adam Smith wrote in his book ”Wealth of nations” monopolies need to be broken up regularly 😉
Joe,
You don’t know what a monopoly is do you?
Earl the price of oil is set by the commodities market not the oil company’s. Besides if you don’t like the cost don’t buy it we are still a somewhat free country. Study up on how the price is set and who effects the price.
What he needs to hatch there’s a plan to stop paying actors so much. They just idiots that can’t do it in real life but do it on a fantasy screen. Most of them were waiters and waitresses before they made it big anyway. I don’t mean to downput waiters or waitresses but it’s not exactly rocket science is it? There is no way that someone is worth $5 million for about 6 months worth of work.
So, we know that the government’s percentage profit for the sale of gas at the pump is 25.8%. Per google, the insurance companies make an average of 4.7% as profit. I am sure in CA, the profit margin is lower when considering the upload of tax dollars, but assuming it is 4.7% of 4.62, if the oil companies gave up 100% on the profits, the price of a gallon of gas in Ca would drop only to 4.40. Still outrageous. The state will continue to drive people and business out of the state until all they have are criminals (including politicians) and illegals.
Energy prices go up and down dictated by supply and demand, gasoline at the pump is lower than one year ago. Republicans efforts to blame energy prices on Brandon made no difference in the 2022 elections.
If the RCA could just pull us out of the Henry Hub system, it would no longer matter to us what California does. Our Governor has control of the RCA. We could be paying Oklahoma prices for gas, with the exception of bush communities that have no port and no real storage capacity.
All the oil company’s should just go on strike and not sell to any state that doesn’t like gas. I give the country less that a week and we would see a different tune. I don’t see any complaints about banks, insurance companys, pharmaceuticals, or politicians taking in record profits.
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